Banks and life companies saw marginal improvements
Commercial and multifamily mortgage performance in the third quarter of 2025 painted a split picture across capital sources, underscoring how uneven the recovery in income‑producing real estate had remained.
Banks and life companies saw marginal improvements, while government‑sponsored enterprises and CMBS posted higher delinquency readings off already elevated levels.
MBA’s latest Commercial Delinquency Report showed bank and thrift delinquencies at 1.27% of unpaid principal balance, barely lower than the prior quarter, and life company portfolios at 0.47%.
Fannie Mae’s rate rose to 0.68%, Freddie Mac’s to 0.51%, and CMBS delinquencies climbed to 6.59%, highlighting continued strain in securitized pools tied to weaker assets. Together, those investors held more than 80% of commercial mortgage debt outstanding.
“Commercial mortgage delinquencies increased for CMBS and GSE loans in the third quarter and decreased slightly for banks and life companies as pressures remain in certain segments of the market,” said Reggie Booker, MBA’s associate vice president of commercial real estate research.
“Property values have stabilized, but loan performance is impacted by shifting property fundamentals, including higher vacancy rates and slower rent growth. Delinquency performance remains highly dependent on property type and loan structure.”
Market still digesting rate and sector shocks
The latest figures followed a volatile 18‑month stretch in which overall commercial mortgage delinquency rates “increased during the final three months of 2024, with increases across most capital sources and property types,” said MBA chief economist Mike Fratantoni, pointing to office as facing “the most challenging combination of weaker fundamentals and stubbornly high interest rates”.
More recently, delinquency rates for mortgages backed by commercial properties “decreased during the third quarter of 2025 compared to the prior quarter,” according to MBA’s broader CREF Loan Performance Survey, which covered $2.8 trillion in loans and 57% of commercial and multifamily mortgage debt outstanding.
That survey found the share of non‑current loans falling overall, even as multifamily and health‑related credits recorded higher stress.
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